Farm Credit Adjustment Act
Summary
The Farm Credit Adjustment Act allows the Farm Credit Administration (FCA) to examine low-risk Farm Credit System (FCS) institutions every 24 months instead of the current mandatory examination cycle. This change aims to provide the FCA with more flexibility in resource allocation. The bill amends Section 5.19(a) of the Farm Credit Act of 1971 and takes effect on October 1, 2026.
Expected Effects
The act will likely reduce the frequency of examinations for qualifying low-risk FCS institutions. This could lead to cost savings for both the FCA and the institutions themselves. It may also allow the FCA to focus its resources on higher-risk institutions.
Potential Benefits
- Reduced regulatory burden for low-risk farm credit institutions.
- Potential cost savings for the Farm Credit Administration.
- More efficient allocation of FCA resources.
- Increased flexibility for the FCA in managing its oversight responsibilities.
- May indirectly benefit farmers through more efficient FCS operations.
Potential Disadvantages
- Potentially increased risk to the Farm Credit System if low-risk institutions become riskier between examinations.
- Possible decrease in oversight rigor.
- Potential for inconsistent application of the 'low-risk' designation.
- The change may not significantly impact the overall stability of the FCS.
- Reliance on the FCA's discretion could lead to concerns about fairness and transparency.
Constitutional Alignment
The bill appears to align with the Constitution, specifically Article I, Section 8, which grants Congress the power to regulate commerce and establish laws related to financial institutions. The act does not infringe upon individual liberties or rights protected by the Bill of Rights. The delegation of discretion to the Farm Credit Administration is within the bounds of established administrative law principles.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).